Table 5-2
The following table shows a portion of the demand schedule for a particular good at various levels of income.

-Refer to Table 5-2.Using the midpoint method,at a price of $12,what is the income elasticity of demand when income rises from $5,000 to $10,000?
A) 0.00
B) 0.41
C) 1.00
D) 2.45

Question

Table 5-2
The following table shows a portion of the demand schedule for a particular good at various levels of income.
 
-Refer to Table 5-2.Using the midpoint method,at a price of $12,what is the income elasticity of demand when income rises from $5,000 to $10,000?
A) 0.00 
B) 0.41 
C) 1.00 
D) 2.45

Quizplus · Accepted Answer

The midpoint method calculates the income elasticity of demand as the percentage change in quantity demanded divided by the percentage change in income. If the elasticity is 1.00, it indicates that the percentage change in quantity demanded is equal to the percentage change in income.

Table 5-2 The Following Table Shows a Portion of the Demand Schedule